Costco solves problem that plagues Walmart and Target

If you've ever spent a meaningful amount of time inside a Walmart or Target store, you know how easy it is to get lost there. 

Trust me — I'm with you. 

Even though the sheer size of many Walmart and Target stores is a draw for consumers, allowing them to stock up on numerous items in a single trip, sometimes shopping at superstores can be incredibly overwhelming.

But the fact that Walmart and Target stores are so massive and loaded with inventory is a blessing as well as a curse. That's because both retail giants have, for years, been the target of retail theft. And it's a problem that isn't going away anytime soon.

Retail theft deals big-box stores a blow

It's not just big-box stores like Walmart and Target that have been plagued by retail theft. There was an 18% increase in broad shoplifting incidents in 2024 compared to 2023, reports the National Retail Federation. 

The problem has gotten so bad that a number of retailers, including supermarket chains, are now using facial recognition technology to identify potentially "problematic" customers, much to shoppers' dismay.

Related: New Target policy makes some shoppers uncomfortable

But since Walmart and Target are such major players in the retail industry, it stands to reason that they're also quite prone to theft.

Walmart loses roughly $3 billion each year to theft, according to GrabOn. Across its U.S. stores, the company faces more than 900,000 shoplifting incidents every year. 

Meanwhile, in September 2023, Target announced nine store closures across New York City, Seattle, San Francisco/Oakland, and Portland, Oregon, due to high levels of theft. 

"We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance," the company said.

Walmart and Target try to fight back

Walmart has taken steps to prevent retail theft, including:

• Installing cameras with AI monitoring at self-checkout lanes
• Increasing the number of loss prevention specialists in stores
• Using RFID tagging in high-risk inventory categories

Target has also taken a number of measures to prevent losses from shoplifting, including:

• Locking up merchandise that's more prone to theft
• Imposing restrictions on self-checkout
• Investing in added security

Despite these efforts, the threat of retail theft remains strong for both companies.

Costco fixed its retail theft and shoplifting problem

While giants like Walmart and Target continue to lose revenue every year to retail theft, it's much less of a problem at Costco. 

In its 2025 annual report, Costco stated, "By strictly controlling the entrances and exits and using a membership format, we believe our inventory losses (shrinkage) are well below those of typical retail operations."

Related: Costco just made shopping faster and easier for members

And that's not a new thing. During the company's Q4 2023 earnings call, then-CFO Richard Galanti said that even after introducing self-checkout, inventory shrink increased by less than one basis point. "Thankfully, not a big issue for us," he confirmed.

Of course, anyone who's ever shopped at Costco knows that there are gate-minders at the front of the store as well as on the way out. In fact, Costco members have long complained about having to show receipts before exiting the store. But that's a key part of Costco's loss prevention strategy.

Granted, that's not the only reason Costco checks receipts. It's also to ensure that members have been charged correctly.

In fact, Costco states on its website, "It is standard practice at all our warehouse locations to verify purchase receipts when customers exit our buildings. We do this to double-check that the items purchased have been correctly processed by our cashiers. It’s our most effective method of maintaining accuracy in inventory control, and it’s also a good way to ensure that our members have been charged properly for their purchases."

But the fact of the matter is that Costco's receipt-checking policy probably saves the company a huge amount of money each year. And through that savings, Costco can continue to offer great value for members. 

Costco's policy often works in members' favor

As a 20-year Costco member, I certainly understand how frustrating it can be to want to leave the store, only to face bottlenecks at the exit. But I happen to appreciate the fact that Costco has a receipt-checking policy in place. 

Not long ago, a diligent receipt-checker noticed that one of my items had accidentally been scanned twice. 

It was a package of blueberries, and the extra $5 wouldn't have been too devastating a loss. But I was happy to not have to pay for an item I wasn't bringing home.

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And it's not just me. 

In a Reddit thread on this very topic, one user wrote, "I’ve actually had them catch where the cashier got me for two of something I only had one of and it was like a $50 item. I was so thankful they caught it."

Given the high volume of customers at Walmart and Target, it may not be feasible to plant employees at the door to check receipts before shoppers exit the store. 

But one thing's for sure. Both big-box giants need to remain vigilant and continue to invest in retail theft prevention. Otherwise, they could be looking at serious losses as criminals get increasingly good at what they do.

Maurie Backman owns shares of Costco.

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